Central Bank Chief Urges European Unity

FRANKFURT — Mario Draghi, the president of the European Central Bank, issued a plea for European unity on Friday and criticized what he said was a “nationalistic tone” in the reaction to recent central bank policy moves.

Speaking to an audience of bankers in Frankfurt, Mr. Draghi beseeched European leaders to overcome their differences and keep making progress to address the flaws in the design of the euro zone. He also defended the decision by the E.C.B. to cut interest rates earlier this month against criticism from Germany.

In particular, Mr. Draghi called on political leaders to create a mechanism for closing down sick banks, a so-called resolution authority. Such an authority is essential for the E.C.B. to carry out its new role as central bank supervisor for the euro zone, Mr. Draghi said. Political leaders meeting in Brussels have been struggling, so far unsuccessfully, to agree on how a resolution authority should be structured.

“It is essential we do not retreat into purely national perspectives with a narrow view of our interests,” Mr. Draghi said.

Mr. Draghi’s comments before a well-attended gathering of bankers came amid increased concern that European leaders, now that they are no longer under intense market pressure, have lost the will to address underlying flaws in the euro zone. Instead, they have blamed each other for economic stagnation in Europe. The Germans accuse the French and Italians of not doing enough to make their economies competitive, while the others attack Germany for focusing too much on exports and not enough on stimulating demand within Europe.

On Friday, official statistics showed that German growth in the most recent quarter was due to increased domestic demand rather than foreign trade, supporting the German argument that the economy is already achieving a better balance between imports and exports.

Two weeks after the E.C.B. cut its main interest rate to a record low of 0.25 percent, Mr. Draghi answered criticism from Germany, including the president of the country’s central bank, that ultralow official interest rates penalize savers. While it is true that low interest rates are hard on pensioners, Mr. Draghi said, a weak economy is worse because it prevents people from building up savings in the first place.

“Rates are low because the economy is weak,” he said.

In recent speeches, Jens Weidmann, president of the German Bundesbank, has called attention to the disadvantages of low interest rates. Mr. Weidmann, a member of the E.C.B.'s rate-setting governing council, is believed to have argued against a cut earlier this month but has avoided criticizing the decision directly.

Mr. Draghi did not say where he thought nationalistic commentary he referred to was coming from. But he appeared to be reacting to suggestions in the German press that the E.C.B. is pursuing policies designed to bail out trouble countries like Italy. Mr. Draghi insisted that members of the E.C.B. governing council, which includes the heads of all 17 national central banks in the euro zone, act in the interest of Europe as a whole.

“In their deliberations and decisions governing council members are neither German, nor French, nor Spanish, nor Italian,” said Mr. Draghi, who is Italian. “They are European.”

Mr. Draghi also called on bankers in the audience to cooperate fully with an in-depth review that the E.C.B. is conducting during the next year of bank assets, in an attempt to identify which banks are weak and must be recapitalized or closed.